Imperial Brands slips in London after market share alert and MO impact

(Il Sole 24 Ore Radiocor) - Imperial Brands slipped on the London Stock Exchange after the tobacco maker warned it expects market share in its core markets to fall with only modest profit growth in the first half of the year. The company also warned of the possible impact of the conflict in the Middle East in the second half of the year. Imperial Brands shares closed the session down 4.84%. Competitor British American Tobacco was also involved in the decline.

In a first-half update, the group that makes Winston, Davidoff and Gauloises cigarettes said it expects low single-digit growth in first-half net revenues from tobacco and next-generation products and adjusted operating profit to be 'slightly higher' than in the first half of 2025, with growth accelerating in the second half. Imperial says it is 'on track to deliver earnings per share growth of at least high single digits and free cash flow of at least £2.2 billion for the full year'. The group says it 'intends to evolve its stance to reflect changing market dynamics' by focusing on the most profitable segments, and this should result in 'in aggregate a modest reduction in market share' in its five largest markets (US, Germany, UK, Spain and Australia) during the first half of the year. As Rbc analysts note, Imperial's 48 basis point increase in market share over the past five years has been central to its recovery, so the expected decline in the first half of the year is a cause for concern. As part of a five-year strategy set out by his predecessor, CEO Lukas Paravicini aims to develop the higher-growth alternative tobacco business while preserving traditional operations. The entire industry is also trying to adapt to declining cigarette sales and the shift towards alternative nicotine products such as e-cigarettes, heated tobacco and nicotine sachets.

On the outlook front, Imperial Brands confirmed its forecasts for 2026, which also point to low single-digit net revenue growth for tobacco and double-digit growth for next-generation products, with a 3-5% increase in adjusted operating profit at constant currencies. At the same time, the company indicated that 'the conflict in the Middle East has caused a more uncertain geopolitical and macro environment'. Imperial stated that 'so far there has been no material impact on the company's business, but the possible impact on the second half of the financial year remains uncertain'. The group will provide further updates on 12 May when the half-year accounts are published.